Wednesday’s Vital Data: Bank of America Corp (BAC), Intel Corporation (INTC) and Macy’s, Inc. (M)

Options activity provides a look at expectations on BAC, INTC and M

By Joseph Hargett, InvestorPlace Contributor

U.S. stock futures are trending higher heading into the open this morning. Wall Street has gotten over the initial shock from after Federal Reserve Chairman Jerome Powell’s hawkish interest rate comments yesterday. However, the major market indices are still on course for monthly losses.

stock market todayIn fact, the S&P 500 and Dow Jones Industrial Average are both looking at a loss of about 2.8% in February, their first monthly loss since March last year. The Nasdaq Composite is headed for a decline of about 1.1% on the month.

As for futures, Dow futures were last seen up 0.24%, S&P 500 futures were higher by 0.2% and Nasdaq-100 futures had added 0.38%.

Turning to the options pits, volume continued to creep higher on Tuesday. Overall, about 19.1 million calls and 17.1 million puts changed hands on the session. The CBOE single-session equity put/call volume ratio bounced to 0.63. The 10-day moving average held at 0.62 after declining for six straight days.

Taking a closer look at yesterday’s options activity, Bank of America Corp (NYSE:BAC) call options were popular despite an FDIC that bank income fell in the final quarter of 2017. Elsewhere, Intel Corporation (NASDAQ:INTC) calls surged after Citibank bumped the company to its No. 1 semiconductor pick. Finally, Macy’s Inc (NYSE:M) bulls jumped on the company’s impressive quarterly earnings report.

Wednesday’s Vital Options Data: Bank of America Corporation (BAC), Intel Corporation (INTC) and Macy’s, Inc. (M)

Bank of America Corp. (BAC)

Despite the favorability of rising interest rates, BAC stock has had a rough time in the past week. Worries grew a bit more yesterday, after the FDIC reported that bank incomes declined in the final quarter of 2017. New tax laws forced many banks to write off tax assets. But, even discounting these circumstances, the FDIC noted that income was still lackluster across the board.

Bank of America stock options traders viewed the recent slip in BAC shares as a bullish opportunity. Volume yesterday rose to 366,000 contracts, with calls claiming 76% of the day’s take. This wealth of optimism is reflected in BAC’s March put/call open interest ratio, which comes in at a lowly 0.57.

With BAC stock showing weakness near it’s January highs, I would expect a bit more caution here by options traders. This doubling down on bullish sentiment could be a warning sign.

Intel Corporation (INTC)

Intel stock is poised to push past it’s January highs and into $50-plus territory today. INTC bulls can thank Citibank for the added boost. Citi analysts said yesterday that they had moved INTC from the No. 3 spot on their semiconductors list to No. 1. Citi when as far as to call Intel the Micron Technology, Inc. (NASDAQ:MU) of 2018. MU stock nearly doubled in 2017.

Intel stock options traders cheered the news. Volume on INTC stock rose to 232,000 contracts, with calls making up 76% of the day’s take. There is room for optimism to grow for Intel as well. The March put/call OI ratio comes in at 0.77, well above the lower range of readings taken in the past year. As such, look for call activity to grow on Intel going forward, especially if the shares establish a base above $50.

Macy’s, Inc. (M)

The retail rally isn’t over yet, with Macy’s taking up the lead yesterday. The company posted better-than-expected fourth quarter earnings of $2.82 per share on revenue of $8.67 billion. Analysts were expecting $2.68 per share on $8.7 billion. Macy’s also said it expects full-year earnings of $3.55 to $3.75 per share, above the consensus target for $3.03 per share.

Macy’s stock options traders were emboldened by the report. Calls claimed 66% of the more than 219,000 contracts traded on M stock yesterday. The activity was a stark shift from recent negativity among M options traders. Currently, the March put/call OI raito rests at a lofty reading of 0.93.

With puts in near parity with calls among front-month options, it will be interesting to see if Macy’s bulls can hold on to their momentum.

As of this writing, Joseph Hargett held no positions in any of the aforementioned securities.

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